ACCT 324 exam 2

an agency relationship:

can be created only for a lawful purpose

principal-agent relationships are most significant for issues that are included in the category of ____ law

contract

when an agent makes authorized expenditures in the course of working on behalf of the principal, and the principal refuses to pay the agent, the principal is violating his/her

duty to reimburse

when a principal falsely leads a third party to believe that another individual serves as his or her agent, the principal has created agency by:

estoppels

a _____ is a person who has a duty to act primarily for another person's benefit

fiduciary

Joshua enters into an agreement with Cathy, an interior designer, to redo his house. Once Cathy has completed designing and decorating the house, she no longer has the author to act on Joshua's behalf. Under the given circumstances, the agency terminated due to:

fulfillment of purpose

a(n) _____ typically allows the agent to conduct all business for the principal

general power of attorney

Mitchel, a real estate agent, buys a property that his principal, Henry, wanted to buy. If Mitchel is aware that Henry wanted to buy the property, then the court will

grant Henry the legal rights for the property

which of the following is true of agency law?

it is primarily state law

which of the following is true of the actual notice of termination?

it must be given to third parties who have had business interactions with the agent

which of the following statements is true of a constructive notice?

it usually consists of publication in a generally circulating newspaper for the area where the agency agreement existed

a durable power of attorney:

specifies that the agent's authority is intended to continue beyond the principal's incapacitation

which of the following is true of the principal's liability for an independent contractor's actions?

the employer cannot escape liability for an independent contractor's tort, if the employer directs the contractor to commit the tort

when an agent commits a crime:

the principal can be liable for the crime if he or she authorized the criminal act

when the principal is disclosed:

the principal is liable for the agreements made w the third party

which of the following statements is true of the requirements for ratification to be effective?

the principal must have complete knowledge of all material facts regarding the contract

if a principal is partially disclosed:

the third party would be aware of the principal's existence but not his/her identity

under the doctrine of "respondent superior," the principal/employer holds _____, which is liability assigned without fault, for any harm the agent/employee causes while working for the principal

vicarious liability

a gratuitous agent is one who

acts without consideration

which of the following statements is true of independent contractors?

building contractors, doctors, stockbrokers, and lawyers are all types of independent contractors